Mortgage financing has evolved over recent years to become increasingly complex and confusing to borrowers with the proliferation of options for loan configuration. For lenders, mortgage financing has become increasingly competitive, with borrowers receiving frequent offers to refinance under ostensibly more favorable terms. Thus, mortgage refinancing occurs frequently and customer loyalty to mortgage financers has been minimal.
In general, financial institutions have devised various mechanisms for promoting customer loyalty. For example, rewards programs have become increasingly associated with credit cards and consumers often favor one credit card over another because of the associated rewards generated with each purchase.
Some card issuers have sought to employ rebates in order to increase use of credit cards. Credit card rebate systems have evolved that provide a rebate tied to general card usage. The entire benefit is enjoyed by consumers who receive a check or credit on their account. However, such credit card rebate systems provide no particular long-term benefits to the cardholder or the card issuer—especially benefits that relate to the card issuer's business. There is limited loyalty-building to encourage cardholders to maintain their existing accounts or open new ones. Moreover, because the rebate is sent directly to the consumer, who can spend it as he/she pleases, there is no mechanism to encourage the consumer to consider other financial products offered by the card issuer or associated financial companies. Nor is there a way to channel funds back to the card issuer to expand business and cross-sell. This is a lost opportunity and significant disadvantage.
Other institutions have suggested credit card systems that transfer a predetermined amount of money to an investment account periodically and bill the cardholder through the credit card account. For example, various systems provide a credit card in combination with a rebate that is also transferred to the investment account.
Often, rewards programs are made more attractive through joint ventures with partners of the card issuers. For example, airlines may provide miles for credit card usage or partnering merchants may provide extra rewards points for purchases
Currently, a solution is needed for providing benefits to mortgage customers and potential mortgage customers in order to enhance customer loyalty.